State retirees anxious about health benefit changes

Court challenge over constitutionality is pending

Hundreds of state retirees packed a meeting in Springfield on Friday to
get information on pending changes to retiree health care benefits. The
cost-saving measure faces a court challenge that could invalidate the
agreement, but substantial work has already gone into rolling out the complex
changes.

An
estimated 520 people filled the main theater of the Hoogland
Center for the Arts in Springfield last week for
a meeting of the Citizens Club of Springfield, with at least 70 people standing
after seating filled up. The crowd of mostly state retirees sought answers
about what will happen when the state rolls out changes to retiree health care
benefits under a 2012 state law.

Historically,
state retirees have paid deductibles and other costs for their state-provided
health insurance, but they haven’t had to pay the premium cost for those
policies. A 2012 state law allowed the Department of Central Management
Services (CMS) to split the cost of premiums with retirees.

With the
new law came a renegotiation between the state and unions over health insurance
plans. They settled on offering retirees a choice between two Medicare Advantage
plans. The first is a PPO plan offered by United Healthcare, and the second is
an HMO plan offered by Aetna. The PPO plan
will be available to all eligible retirees, while the HMO plan will only be
offered to those retirees who still live in Illinois.

Janice
Bonneville, deputy director of CMS’ Bureau of Benefits, explained the benefits
to the crowd, answering questions during and after the presentation. She said
the changes only apply to retirees who are on Medicare Parts A or B, or who
have dependents who are on the same.

She explained that the new plans
come with a $1,300 yearly deductible for state retirees and a $1,000 yearly
deductible for retirees in the college and teacher retirement systems. State
retirees will pay 10 percent of their premiums, while college and teacher
retirees will pay 20 percent.

Unlike
normal PPO plans, which charge patients more for using “out-of-network”
providers, Bonneville said retirees with the state’s new PPO plan can use “any
willing provider” who accepts Medicare. Both the HMO and PPO plans also cover
the infamous Medicare “donut hole” that usually leaves patients uncovered from
$2,500 to $4,500 in prescription drug costs.

Rick Carlson, who moderated the
event and is former executive director of the IllinoisComprehensive Health Insurance Program
(ICHIP), said retirees need to be aware that the plans offered by the state are
group plans, which have substantially different – and often superior – benefits
compared with individual Medicare Advantage plans offered by companies that
aren’t contracting with the state.

“Believe me, if you don’t like the
state’s plan, you’re not going to like the individual plans,” Carlson said.

All of the preparations made so far
could become moot, however. When the state law passed in 2012, a handful of
state retirees filed lawsuits against Gov. Pat Quinn and CMS director Malcolm
Weems, seeking to stop the health benefit changes on the grounds that they
violate the state constitution’s prohibition on diminishing state retirement
benefits, among other claims. The lawsuits have been consolidated into a
class-action lawsuit that was heard by the Illinois Supreme Court last month.

David Amerson, retiree coordinator
with AFSCME Council 31, the largest union of state employees, said the union
negotiated with Quinn’s administration despite being part of the lawsuit.

“We maintain through all of this
that (the law) was an unconstitutional diminishment of our members’ retirement
benefits,” Amerson said to applause. “At AFSCME, we’re kind of old-fashioned.
We still think union contracts mean something.”

If the Supreme Court strikes down
the law, lawmakers will likely have to come up with different cost-saving
measures for retiree health care. Depending on how the high court rules, the
case could also serve as precedent in the larger battle over state retiree pensions,
which also hinges on disagreement over what constitutes a diminishment of
benefits.

Bonneville said CMS is contacting
retirees with an explanatory letter, then a reminder postcard, and finally an
enrollment packet with necessary forms and a schedule of seminars around the
state. The seminars will feature representatives from the insurance companies
to answer questions about specific situations, Bonneville said.

She stressed that any retirees who
don’t take action during the open enrollment period that runs from Nov. 12 to
Dec. 13 will be automatically opted out of coverage. Once someone opts out,
either by default or by choice, he or she cannot return to the system under
state law, Bonneville said, adding that CMS supports changing the law.